MR R P CHARLES v P J R ELLIS & W J E ELLIS T/A PROPERTY SERVICES [2001] UKEAT 1002_00_1007

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 1002_00_1007Case No Appeal No. EAT/1002/00Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR R P CHARLESAPPELLANTP J R ELLIS & W J E ELLIS T/A PROPERTY SERVICESRESPONDENT
Before
Mr Justice Douglas BrownLord Davies of CoityDate 10 July 2001
[1]APPEARANCES For the Appellant MR K P CHARLES (The Appellant in person) For the Respondent MISS JACKSON (of Counsel) Abbey Legal Protection Ltd 6th Floor 17 Lansdowne Road Croydon CR0 2BX MR JUSTICE DOUGLAS BROWN This is an appeal by Mr Roger Charles from a decision of the Employment Tribunal at Exeter, the Chairman Mr J W Major, on 30 June 2000. The Respondents were Mr and Mrs Ellis trading as Property Services. The application before the Tribunal was for unfair dismissal and constructive dismissal. The result was that the application was dismissed. The grounds of appeal are numerous but the matters for decision have been much reduced after the Preliminary Hearing.[2]We state the background facts in summary. Mr Charles, who has conducted his appeal with charm and persistence and not a little skill, attempted to engage us in a much wider review of the facts of his employment and the events leading up to the end of it but we do not think it is necessary to go into detail until the critical events of November 1999. The Respondents ran a property management service for landlords. The Appellant, his wife and the Respondents had known each other for many years before, in 1995, the Appellant began employment with the Respondents as their office manager at their offices in Plymouth. It is not necessary to refer to the course of that employment before November 1999 save to say that the Employment Tribunal found that over a period of time the Appellant had become increasingly disenchanted by his employment.[3]The essential facts found by the Employment Tribunal are these. On 17 November 1999 there was an argument at work between the Appellant and both Respondents. The Appellant accepted that he had been extremely offensive to Mr Ellis during this argument. The argument ended with the Applicant saying something along the lines that he had enough, that he was going home and that he was either sick or going sick. Mr Charles has submitted to us that that was an imperfect finding of fact because it did not reflect the actual words spoken. Be that as it may, that is the finding of the Tribunal in their Extended Reasons. The reasons continue - that the Applicant was very upset but there had been no complaint of sickness in preceding days or on that day. Mr Ellis did not regard him as sick and there were further words exchanged about sickness. The Applicant indicated he was not sleeping and not eating. Mr Charles submitted to us that with advantage at that point the Tribunal might have referred to some detailed evidence which was not seriously challenged and certainly in part was agreed that the Applicant was suffering from stress which was known certainly to Mrs Ellis. What the Tribunal did say was this:
"With hindsight it is perhaps easy to realise that the Applicant was suffering from stress and/or depression and that he had allowed disagreements about work to reach a level which was not justified."
There is no doubt this was the finding of the Tribunal, not, I think, challenged by Mr Charles. Mr Ellis strongly took the view that the Appellant was not genuinely sick and that if he was going off work he would be absent from work but not through sickness. He wrote a letter to that effect referring to a disciplinary meeting which was going to take place. The letter concluded:
"You threatened to sign on the "the sick" and any sick notes received will not be paid as we consider you are not genuinely ill and we would expect you to report back to work without further absence."
The Appellant did leave work, went straight to his doctor who immediately provided a sick note signing him off work for 28 days with stress and anxiety. The next day he telephoned the Respondents to tell them this and he posted his sick certificate immediately. On 18 November the Respondents wrote:
"We have today received your sick note issued by your doctor, but as you told me in advance BEFORE leaving the office that you intended to sign off as sick, this does not alter my view that this is an attempt by yourself to avoid returning back to work as requested without further unauthorised absence and also to avoid attending the formal disciplinary on Thursday 25 th November as advised. To change my view point [we interpolate to say this is clearly Mr Ellis writing] you will need to see an independent doctor of my choice as clarification."
The Appellant then replied to that. The Tribunal certainly took the view that the Respondents were not entitled to request such an examination but the reply, the Tribunal found, was of some significance. Dated 24 November the letter is in these terms:
"Thank you for your second recorded delivery letter. As the doctor – a qualified GP who is not my doctor – is of the opinion that I am unfit for work for the reasons stated, I would be interested to have from you in writing the medical grounds on which your opinion is based. I can then refer those grounds to the doctor for his opinion. Until he declares me fit for work, I shall not be returning. This also means that I shall also not be attending any "so-called" disciplinary hearing until I return to work. I note that your last two letters to me have been written by Phillip, as he alone has signed them."
The Respondents, by Mr Ellis, replied immediately on 26 November, again dealing with the intention to go sick and avoid a disciplinary hearing, and the letter continued:
"If you continue to decline my request to be examined by an independent doctor of my choice, then you will need to give your written authority to me, without further delay, to approach your doctor for his medical report on your health."
At that point, on 29 November, the Applicant for the first time raised the question of pay in a letter. He further sent a fax on 30 November demanding his pay to the end of the month. The Respondent replied the same day, referring to previous correspondence and said:
"… you were advised that further salary payments would be conditional, for clarification, on you agreeing to either being examined by an independent doctor of my choice, or your written authority allowing me to approach your doctor for his medical report on your health. The delay in any possible further payment, which may be due, is being caused by your refusal to agree to either of my reasonable request made of you. Your prompt attention in this matter will avoid further delay."
Then the Applicant sent a fax on 3 December, again, a communication regarded as important by the Employment Tribunal:
"Thank your for your letter of clarification. As you have confirmed that further salary payments would be conditional on (my) agreeing … or (my) written authority allowing (you) to approach my doctor for (her) medical report on (my) health I hereby give my consent for your you to do so. I have also given a copy of this fax to my doctor as my authority for her to reply direct to you. Now that I have given this consent, I await the balance of my salary by return of post."
The Respondent did not delay and wrote to the doctor concerned, a Doctor Eadie, the same day, requesting the information and adding:
"Once this information is to hand I will then be in a position to be able to reply to his request for a further payment of salary…"
A copy of that was sent to the Appellant. The Appellant then sent a fax to the Respondent on 6 December saying that the payment of salary (contractual sick pay) was conditional only on his giving authority for the approach to the doctor. It had not been forthcoming. There was a repudiatory breach which he accepted and in that fax he resigned from his employment. The Respondent replied with a hand delivered letter denying that there had been any repudiatory breach or that the Applicant had been constructively dismissed. saying:
"There is a genuine dispute here as to your entitlement to statutory sick pay. Matters have not been helped by your unco-operativeness at the outset. I would ask you to carefully reconsider your current position and urge you to return to work with a view to resolving this matter."
Mr Ellis spoke to the surgery. What happened next has attracted criticism from the Appellant at this hearing, that the doctor's surgery, if they gave any information to Mr Ellis, were acting in breach of confidence and in breach of statute. The reasons continue - it was not clear whether Mr Ellis was told anything about the exact contents of the report or whether he was simply told that it was satisfactory and straightforward from the Applicant's point of view. Once the Respondent knew that the report was on its way, the Respondent sent a cheque for the balance of the salary on 8 December. The report, which had been considered not only by Dr Eadie but by a doctor who had initially seen and given the sick note, arrived on 13 December.[4]As we have said, at the Preliminary Hearing a substantial number of matters were raised which went back over the whole of the employment of the Appellant by the Respondents. At the Preliminary Hearing these questions were identified for the Full Hearing today. Firstly, were the Respondents in breach of contract by withholding sick pay? Secondly, if so, was the Appellant entitled to regard that as a repudiatory breach of contract? Thirdly, if so, did the Respondents act reasonably in all the circumstances, which is not a matter, in fact, addressed by the Tribunal. The Tribunal found that the Respondents were not in breach of contract, let alone were they in repudiatory breach. What they found can be seen in paragraphs 4 and 5 of their reasons, which we quote part of:- "4 The only matter left for the Tribunal to decide is the effect of the delay in payment of the contractual sick pay. The contract itself simply refers to payment of sick but the usual arrangement is that the situation follows that of statutory sick pay. No medical certificate is required for up to 7 days. When statutory sick pay kicks in a doctor's certificate is required and the employer even if he pays full pay can recoup some monies from the state. Even if it were not in the contract it would be unreasonable of an employee to say that a doctor's certificate was not required under his contract and he was not prepared to assist the employer in recouping those monies. 5 The Tribunal finds that the failure to pay the contractual sick pay until the letter dated 8 December is not a breach of contract let alone a fundamental breach. Whilst it is correct that the monies should have been paid under the contract on the 30 November the Applicant in effect consented to delay, firstly by opening the door by his letter on 24 November which by implication indicated that medical information would be made available to the Respondent and secondly, by his fax of 3 December giving authority for the doctor to be approached." Then in detail in paragraphs 6 and 7, which we need not refer to, the Tribunal set out their reasons for any breach not being a repudiatory breach of contract.[5]Before us, Mr Charles has argued that insofar as the reasons depend upon a finding of reasonable conduct on the part of the employer, that was not justified by the evidence and amounts to a finding of fact for which there was no evidence justifying it. He submits that the finding of the Tribunal that he consented to the failure to perform the contract by paying salary at the end of November was a conclusion that they should not have come to because it was obvious on the facts available to the Tribunal that he had been pressurised, the pressure being financial, by the Respondent into agreeing to provide authority for the medical report and delaying the payment of sick pay. So Mr Charles submitted that there was clearly a breach of contract and he argued that it was clearly a fundamental breach of contract. To that end he referred us to a number of authorities, to some of which we now refer. The first, and this is the principle authority relied on by Mr Charles, is R F Hill Ltd v Moony , a decision of the Employment Appeal Tribunal where the facts were somewhat different to the present case. Mr Moony was employed as a salesman, the basis of his remuneration being a salary plus 1% commission on sales. In 1980 his employers sought to introduce a new remuneration scheme which deleted the 1% commission on sales. The Industrial Tribunal found that the employers had committed a fundamental breach, which constituted a repudiation of the contract entitling Mr Moony to treat himself as having been constructively dismissed and that the dismissal was unfair. The principle which Mr Charles relies on of the judgment of Mr

Justice Browne-Wilkinson, President, are these:

"The obligation on an employer to pay remuneration is one of the fundamental terms of a contract although a mere alternation in the contractual provisions does not necessarily amount to a fundamental breach constituting repudiation. If an employer seeks to alter that contractual obligation in a fundamental way, such attempt is a breach going to the very root of the contract and is necessarily a repudiation. The obligation on the employer is to pay the contractual wages and he is not entitled to alter the formulae by which those wages are to be calculated."
He also referred us to the case of Cantor Fitzgerald International v Callaghan [1999] IRLR 234 . The principle of law which Mr Charles seeks to extract from this decision of the Court of Appeal is this:
"Where an employer unilaterally reduces an employees pay or diminishes the value of his salary package the entire foundation of the contract of employment in undermined. Therefore an emphatic denial by the employer of his obligation to pay the agreed salary or wage or a determined resolution not to comply with his contractual obligations in relation to pay and remuneration will normally be regarded as repudiatory."
The third case on this aspect of Mr Charles' argument which he referred to and which we refer to as well is Adams v Charles Zub Associates Ltd [1978] IRLR page 551. In that case the Employment Appeal Tribunal presided over by Mr

Justice Slynn, President, held this by a majority:

"The Industrial Tribunal had not erred in holding the failure by an employer to pay the employee his monthly salary on the due date though a breach of contract was not so serious a breach as to justify the Appellant in resigning and claiming constructive dismissal. Failure to pay an employee's salary on the due date may amount to conduct which constitute breach going to the root of the contract but which shows that the employer has no intention thereafter to honour the contract and thus justifies the employee in resigning but the circumstances of each case must be looked at."
In that case salary for one month was not forthcoming, the employee had been told that the money was coming from a client in Argentina and he had been told that the money was on its way and that the company was anxious to pay and would pay as soon as the money arrived. This Tribunal held in those circumstances that although the breach and the failure to pay the salary on the due date was a breach of contract it was not a significant breach going to the root of the contract which entitled the employee to accept it and treat himself as being constrictively dismissed. Nor did the evidence indicate that the employer's actions show an intention no longer to be bound by one or more of the essential terms of the contract.[6]The Respondent's answer to these submissions is that there was no breach. There was an implied term that medical information if reasonably requested would be provided but even if there was a breach found, the Appellant knew that the money would be forthcoming and indeed it came two days later after his letter of 6 December.[7]In cases of this kind, fundamental breach is a breach of contract more serious than one which would entitle the other party merely to damages and which at least would entitle him to refuse further performance of the contract. That is to be found in the speech of Lord Wilberforce in the Suisse Atlantique Case [1967] 1 Appeal Cases 361 at page 431. In the same case Lord Reid described it as:
"The well known type of breach which entitles the innocent party to treat it as repudiatory and to rescind the contract."
(at page 434 ) Here the undoubted fact is that the Appellant was paid his salary monthly in arrears. He was not paid on 1 December 1999 for the period 17 November to 30 November, the salary being sent out, as we have described, by cheque on 8 December. So it was just over a week late. This was potentially a breach of contract but we have to consider a finding by the Tribunal that it was not a breach because they found that the Appellant had in effect consented to the delay by the two letters of 24 November and 3 December. We have to ask ourselves whether Mr Charles is right when he says there was no evidence upon which they could come to that conclusion. We have to say, having looked at all the material before the Tribunal, this was a finding on the facts which the Tribunal were entitled to come to. If the Respondents were in default it was in refusing to adhere to the promise made that pay would follow the authority given to the doctor but even so the delay was two days, three at the most, and the Tribunal were entirely right, in our judgment, in not regarding this as a breach of contract. Even if there was a technical breach, it was not serious, and it certainly did not strike at the fundamental purpose of the contract and was not so serious that it entitled the Appellant to treat the contract as repudiated.[8]It is obvious from the papers that the Appellant left his employment, no doubt in an angry mood, with feelings of hostility towards his employer but the conclusion which the Tribunal came to that he was not constructively dismissed was one which, on the evidence before them, the Tribunal were fully entitled to come to on the facts. In all those circumstances this appeal is dismissed.